Select Committee on Trade and Industry Minutes of Evidence

Memorandum submitted by Chartered Institute of Patent Agents

  The Chartered Institute of Patent Agents ("CIPA") was founded in 1882 and received its Royal Charter in 1891. CIPA represents the interests of Fellows and Associate Members engaged in the establishment and exploitation of patents, trade marks and design rights. CIPA represents members employed by a cross section of industrial firms (working as patent or trade mark managers), private practice (as patent or trade mark agents) and the legal profession (in specialist IP practices). Our members represent persons and firms engaged in industry and commerce, whether small, medium or large enterprises, in the UK and elsewhere.

  CIPA has recently made submissions on behalf of its members at, inter alia, discussions on the European Commission Green Paper on Combating Counterfeiting COM (98) 569 15 1098 and to the House of Lords committee considering the 1998 Competition Bill. CIPA is represented on the Standing Advisory Committee on Industrial Property ("SACIP") and took part in discussions on trade mark owners' rights to control parallel imports at the 45th meeting of SACIP on 1st February 1999.

  CIPA is very pleased to be asked to assist in the present Inquiry and the following submissions are in the order of questions raised in Press Notice PN6 98/99.

Question 1  "Why does "grey" and parallel trading occur?"

  CIPA believes that "grey" and parallel trading derives from decisions taken by brand owners as to where and how they sell, and for how much they sell their products or services. It is the right of a brand owner to sell under the brand products of different qualities according to the brand owner's judgement of market conditions. The question is whether brand owners have any right to dictate resale. It clearly lies in the economic risk sphere of a brand owner, for example, to sell last season's stock in an Eastern European country. (This was the matter decided in the Silhouette case, Silhouette International Schmied GmbH & Co KG versus Hartlauer Handelsgesellschaft mbH; ECJ case C-355/96). Where differential pricing of standard stock is encouraged by the brand owners, "grey" and parallel trading will occur.

Question 2  "What are the costs and benefits to producers and consumers?"

  CIPA believes that the costs of "grey" and parallel trading to producers has been well documented by submissions from organisations such as the British Brands Group and AIM. However, CIPA would note that the interests of importers and distributors also have an entitlement to be considered. It is a legitimate economic activity to turn a profit by buying in the cheapest market and selling in the dearest. The growth of electronic trans-national commerce should also be considered in this context. It is now possible to dial up a US retailer of clothing on the Internet and purchase branded products (from the UK) at considerably cheaper cost than purchasing the same products in the High Street.

  The main benefits to consumers lie in the availability of cheap products. It has been suggested by some interests that consumers do not receive the same level of service and after-sales support from, for example, supermarkets who sell batches of televisions. However, against this may be stated the view that consumers are now increasingly sophisticated and capable of differentiating between levels of service as well as levels or price.

Question 3  "Where does the public interest lie in respect of such trading?"

  CIPA wish to remain neutral on this question because its members cover the whole range of industry from multi-national to importers to SME's and individuals.

Question 4  "Should more or less protection be give to brands?"

  CIPA understands this question to refer to the protection of "get up", and believes the question to be prompted by concern about "look alike" branding.

  CIPA did not support efforts by some interests to provide additional protection for brand owners in the 1998 Competition Bill. CIPA believes that the terms "get up" and "brands" are insufficiently precise to warrant additional protection, and such further indefinite protection as was suggested in the 1998 Competition Bill would actively disadvantage persons wishing to search the state of the Register in order to know whether they are clear to adopt a particular trade mark. Where sufficiently distinctive in fact, aspects of get up such as colour or packaging may be protected under the Trade Marks Act of 1994 (see below) as may shapes of containers. The law of passing off provides brand owners with additional remedies, for example the recent case of United Biscuits (UK) Ltd versus Asda Stores Ltd (1997) (PENGUIN/PUFFIN). CIPA does not believe further legislation in this area is warranted at the moment. There is such a thing as "fair following", and CIPA recognises that interest of manufacturers seeking to break into established markets are also worthy of support. Manufacturers suffering particular problems with certain supermarket chains imitating their get up are at liberty not to supply them.

Question 5  "Are trade marks insufficiently or excessively protected?"

  The provisions in the Trade Marks Act 1994 give the potential for realistic trade mark protection, removing some of the anomalies and out-dated thinking of previous legislation. Protection for a trade mark has always extended to marks similar to the sign which is registered, as well as the identical mark. Under the Act, protection now extends to similar goods or services, as well as those listed in the registration, where there is a likelihood of consumer deception and/or confusion. As noted in the submission to question 4, colour, shape and packaging may now be protected where sufficiently distinctive; ie where the trade mark owner has done enough, either by the nature or the mark adopted or by the use made of it, to distinguish his mark from those of his competitors and from those normal descriptive words wanted in his trade.

Question 6  "What area the main problems with existing measures to detect and prevent counterfeiting and piracy?"

  CIPA attaches its submission to the European Commission Green Paper on Combating Counterfeiting in response to this question[1].

Question 7  "How can such measures be made more effective?"

  CIPA refers to its submissions made in response to question 6. In a UK context, CIPA strongly supports and commends the work of the local Trading Standards Officers concerned with combating counterfeiting. Trading Standards Officers are given wide responsibilities under Section 93 of the Trade Marks Act 1994, and CIPA would like to see this important work receive wider recognition and funding.

Question 8  "Are there problems with definitions?"

  CIPA does not believe so. CIPA supports the definitions used for "counterfeiting" and "piracy" by the Anti-Counterfeiting Group. As noted in response to question 5, CIPA does not believe the terms "brand" and "get up" to be capable of precise defintion.

Question 9  "How can Intellectual Property Rights be more effectively agreed and enforced internationally?"

  This is a broad question, in part answered by submissions made to question 6. On the question of "international" versus "EC" exhaustion of rights, CIPA notes that the English courts have historically favoured international exhaustion in cases such as Colgate Palmolive Ltd and Another versus Markwell Finance Ltd and Another (1989) RPC 497 C.A. CIPA further notes that the position before the European Court of Justice is currently fluid, with various cases on the issue of international versus EC-wide exhaustion in the Referral process or awaiting Referral. CIPA supports the proposition that the existing provisions of the Agreement on Trade Related Aspects of Intellectual Property ("TRIPS") agreed at the Uruguay Round should be implemented before reopening discussions of such issues at the next round of international trade talks.

29 March 1999

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